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Avianca Brazil File Bankruptcy: Jet Repossession Debacle

Avianca Brazil filed for bankruptcy protection almost a week ago, airlines faced with the prospect of repossession of a large chunk of its fleet by its multiple big-name aircraft lessors, the airline has sought for backup from the country’s judicial system, so where does that leave its aircraft?

The bankruptcy protection was filed in the 1st São Paulo Commercial Court on December 10, 2018, officially confirming the news after few days of filling. The airline said it had been forced to proceed with the bankruptcy filing, as its leasing companies’ jet repossession petitions threatened its operations.

According to reports there are three leasing companies, including BOC Aviation and Aircastle subsidiary Constitution Aircraft Leasing have sued the Brazilian carrier for the return of some 30% of the carrier’s fleet according to reports,the bankruptcy filing indicated the three lawsuits totaled 14 planes.

A stock market disclosure by Air castle confirmed it had moved to repossess 11 planes from the carrier after securing the aircraftsrelease by a court case in São Paulo earlier in the starting of the month.  a report by ch-aviation.com on December 11th states that BOC Aviation also won a preliminary injunction in a Brazilian court ordering the release of two of its planes.

Opting to clarify media reports, Avianca Brazil publicly disclose on December 12th that the bankruptcy filing resulted from the reluctanceof its lessors to reach an amicable agreementwith the airline, a Facebook post by the carrier reads. It also said at the time that its operations would not be affected and that passengers can have absolute peace of mind when making reservations and purchasing tickets.

 ch-aviation.com explains that If granted, the bankruptcy filing would allow Avianca Brazil judicial and extrajudicial recovery procedures: meaning, it would be protected from creditor claims while a recovery plan is implemented. But there is a catch – in order to get legal recovery, the company must present a plan to creditors on how it would pay off its debts.

A source with knowledge of the lawsuitsaid Avianca Brazil owes its lessors some $100 million. Court records reportedly show the airline also has debts to suppliers, including airports, fuel and maintenance companies that amount to $125 million.

the carrier’s debts to airports including both public and private sectors is around a total of $26 million alone other creditors include hotels that host crew. However, the details of the lawsuits and of Avianca Brazil’s debts remain unclear as its bankruptcy case is under judicial seal.

Avianca Brazil must have known the perfect storm was imminent when it filed for bankruptcy. The legal document itself was essentially a petition to hold onto its aircraft for some extra time as the company seeks funding to cover its overdue payments.

According to A21.mx, on December 13, a judge in the Brazilian court granted Avianca Brazil bankruptcy protection on its debts, allowing the carrier to keep at least 10 planes, currently still under dispute, for another 30 days. If the airline cannot reach a deal with its lessors during that time, it will lose the planes.

AVIANCA airline was once one of the prominent names in Brazil aviation industry.It is the Brazilian commercial aviation company based in Sao Paulo. This airline service is owned by Brazil Synergy which is led by German Efromovich. AVIANCA was first introduced an air taxi company called OceanAir. It served executives and workers of the petroleum industry and Macae Campos dos Goitacazes. In 2002                 the owner gets authorization FAA which was formerly known as DAC to operate the airlines in collaboration with Rio Sul Varig group., from here the journey of AVIANCA Airlines kickstarted and it began operating in the cities which were rejected by its partner, the owner of the company used to operate regional flights but despite this it has a huge network. AVIANCA airline comes in notice because of its vibrant color used to decorate the aircraft. The Embraer Brasilia was painted in the red, yellow, light blue pink, orange, gray and white color. In 2003 AVIANCA airline again comes into the picture with its Fokker 50 which were painted red, beige and pink in color. The São Paulo-based carrier’s fleet consists of 50 all-Airbus aircraft (comprising A318s, A319s, A320s and A330s)

News Source: Aerotime